A rabbi at the center of a $146 million nursing home mortgage default has agreed to settle a lawsuit that accuses him of operating a scheme that targeted the Orthodox Jewish community in Chicago.
The lawsuit was filed by the Securities and Exchange Commission in the U.S. District Court for the North District of Illinois on Thursday.
It accuses Rabbi Zvi Feiner, his company, FNR Healthcare, and former executive Erez Baver of soliciting money from investors in 2010, including more than $10 million from at least 62 investors since 2014. The complaint also names Baver’s company Cedarbrook Management.
Investors were told the money would be used to purchase nursing homes and assisted living facilities in the Midwest, but it was allegedly used to pay distributions to earlier investors, support struggling properties, pay back loans and for personal use.
Baver and Cedarbrook have agreed to settle charges and pay about $2.25 million and a civil penalty, which has yet to be determined. Feiner has also agreed to settle the charges and he and his attorney are negotiating a figure, Crain’s Chicago Business reported.
Feiner, the former owner of Rosewood Care Centers, agreed to pay $965,000 in civil penalties in August for failing to submit the company’s annual audited financial reports for fiscal years 2015, 2016 and 2017, which was a requirement for the HUD mortgage program.
Rosewood Care Centers defaulted on a record $146 million in mortgages for its nursing home and assisted living facilities located in Illinois and Missouri last August.